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tv   Nightly Business Report  PBS  February 14, 2014 6:30pm-7:01pm PST

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this is "nightly business report" with tyler mathisen and susie gehrig. brought to you in part by -- >> founded by jim cramer is an independent source for stock market analysis. it's home to cramer's multi-million dollar portfolio. learn more at stock have their best weekly performance of the year after a rocky start to 2014. unhealthy outlook. weight watchers, one of the best-known name in this weight loss, lost a big chunk of its market value today as people flocked to new technologies like apps and fitness bands to shed the pounds. market monitor. looking for stocks that pay dividends and do well in a slow-growth environment? our guest tonight has
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recommendations. all that and more on "nightly business report" for friday, february 14th. good evening, i'm sue herera. >> good evening from me as well. i'm tyler plath son by the way. for stocks today capped the best week so far this year. the dow, nasdaq and s&p 500 all gained more than 2%. the week. nasdaq touched its highest level in nearly 14 years and ran its win streak to seven consecutive sessions. the longest such streak since last july. now all ten of the s&p 500 sectors were positive for the week led by utilities, health care and materials. investors shrugged off a drop in industrial production data and today at least said, snow what, to winter weather. the dow gained 126 points. the s&p 500 rose more than 8. the nasdaq picked up 3. gold was higher by $19 an ounce closing at 1319. in the process it broke through a key level and traders say look
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for gold to rise now in small increments. >> let's turn to chris gaffney for his market analysis. he's senior market strategist with everbank. nice to have you here. >> thank you. >> we posed the question at the start of the show whether or not this correction is over after such a rocky start to the new year. what do you think? >> we think it is over. we certainly had a rocky start to the new year. but since hitting the bottoms, stocks have recovered. as tyler stated in the beginning of the show, we're back to levels that were pretty much at the beginning of the year. so we do think it's over. >> what changed? >> well, i think sentiment changed. the drop was mainly due to fear. we had an emerging markets crisis, a couple of emerging market countries had currency crisis. we had a slow-down in china. the combination of those two created a lot of fear and negative sentiment. i think the market was primed for a pull-back. so we got what we wanted. and i think we're establishing a
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base to move higher now. >> yet on the other hand we've seen a number of the big houses on wall street cut their gdp estimates because of the bad weather that we've had. what's your sense of the economy as a whole? and whether or not this recent spate of bad weather might derail the economic recovery, to a certain extent the recovery on wall street? >> sure. i think that going into 2014, many investors and many of the investment houses had an exaggerated expectation of what 2014 would bring as far as the u.s. economic recovery. recent data has certainly brought us back to reality. we think that you're going to see continued slow growth here in the u.s. but it is going to be growth. we will see some volatility. as far as the markets, we do think that we'll see some volatility continue and some pull-backs as we have seen. this probably won't be the last of 2014. but we are looking better now. >> how would you deploy your
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money? let's say you had $100,000 worth of inxremtal cash that you wanted to put to work. how would you apportion it sort of between stocks, bonds, precious metals, real estate, so forth? >> well, diversification is the key. at everbank wealth management we have well-diversified portfolios. in fact we have pretty good positions in both currencies and commodities. and these are more defensive positions, if you will. but we like to have a very diversified portfolio across all asset classes that are non-core related. so when the market goes down you've got other parts of your portfolio that are moving up. >> what worries you about the market, if anything at all? >> well, i think the weather as you pointed out earlier, sue. it's a worry. i think it's going to be a drag on the u.s. economy during the first quarter. while earnings in the last quarter of 2014 came in
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basically positive, we saw a lot of negative forward guidance. so i do think that we will see the weather impact gdp in the first quarter. but, you know, what can you do about the weather? >> very quickly, are your positions in some of those nontraditional asset classes, currencies, commodities, relatively higher now then they would typically be very quickly? >> no. we keep a fairly stable asset class diversification. so we really -- we bought some more into precious metals at the end of last year with the big drop that we saw there. so we did reallocate a little bit. but they're fairly typical. >> all right, chris, thanks so much for joining us. chris gaffney, senior market strategist with everbank, have a great long weekend. >> thank you. more evidence that the unrelenting cold, stormy wet they are winter is impacting the economy. factory output in the u.s. unexpectedly fell by .8% last month. the most in more than four and a half years. the federal reserve said the bat
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weather curtailed production. and although the philadelphia fed's quarterly survey did not blame the weather per se, economists do expect the economy to grow at a rate of just 2% this quarter. that's down .5% from the last estimate. but economists there did raise their full year growth estimate by .2% to 2.8%. >> believe it or not traders and investors are talking about something besides weather. remember stock pickers? they've seemed out of style in recent years as momentum stocks and broad industry etfes have taken over. but with the bull market maybe moving at a slightly slower pace and volatility predicted this year it may be time to go back to the basics. dominic choo explains. >> back to normal again. that's how many traders are describing this market because stocks now trade more on company fundamentals and not as much on just large swings in investor sentiment. that happened during the financial crisis when everything was either down or up in tandem.
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>> but now we've got a real difference in the market. stocks that are shorts are actually going down. and stocks that are quality that are based on quality companies are actually going up. so this is why they call it a stock picker's market. and that's more true this year than it was last year or in years past. >> that means there's an opportunity to do some research and actually outperform the broader market. even within specific industry groups we're already seeing divergence in the way some stocks trade against others. for instance the pharmaceuticals industry. big drugmakers like merck and pfizer have similar lines of business. but so far this year merck shares have gained 11%. pfizer shares have risen by just 4%. a similar story is playing out in the world of high-tech computer chips. shares of memory chipmaker micron technology are up 14%. meanwhile, shares of intel, the world's biggest maker of chips for personal computers, they're down 5%. these types of performance
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discrepancies are allowing some professional money managers to earn bigger profits for their clients. and this kind of scenario could be here for the foreseeable future. >> i think this year you're going to finally see for the first in five or six years rapid management does outperform. whether picking individual stocks yourself or looking for the mutual fund managers who are able to do that for you, i think that's where investors want to be. >> that's not to say things can't and won't change back to the way they were during the crisis. but for now, stock pickers will take normal and be happy. >> and we'll be getting stock picks from our market monitor guests coming up a bit later in the program. weight watchers used to be the gold standard for shedding unwanted pounds. but the company may be oh so yesterday. weight watchers stock fell nearly 28% today. its worst loss on record.
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joss lipton tells us why. >> weight watchers is a company focused on helping consumers cut weight. today investors cut their positions in the stock. weight watchers nosedived in today's trade losing one-quarter of its value. the company told investors on its conference call that 2014 will be a challenging year. part of the problem, they say, headwinds coming from new technologies. instead of attending weight loss meetings, people are using free apps, such as my fitness pal and lose it, to track weight loss. weight watchers is also dealing with increasing competition of wearables, tiny computers that track activities and calories which consumers wear on their wrists. >> i think overall if the company doesn't improve its entire technology platform, mobile apps, online platform, wearable technologies, i think it's going to be left in a difficult position. i think consumers have fully embraced the idea of using
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smartphones and wearables to manage weight loss programs. and i think that the company has to embrace that. >> there's a lot of buzz about wearables. specifically for fitness enthusiasts. canalis, the tech research firm, predicts smart bands will reach 8 million shipments this year and jump to 23 million by next year. the leaders in wearables include nike, fit fit, as well as jawbone, maker of the upwrist band which helps you understand how you sleep, move and eat and costs about $150. big-name invest investors are moving into wearable. jawbone is poised to complete a new $250 million round of funding valuing the company at more than $3 billion. analysts say the wearables market will continue to evolve over the next few years, adding new functions for consumers. >> they'll continue to improve on not only telling you what you're eating, how you're exercising, but how you're doing
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physically at any given point in time. there may be an alert out if you might have a heart or tack. other things like people tell other people where your location is if you've got a medical problem. they continue to advance kind of on this health vector. >> wearables pose a real threat to companies like weight watchers. analysts say even if they figure out wearables or risk becoming obsolete. still ahead, one of the biggest ponzi schemes of all-time. nope, not bernie madoff. allen stanford. and five years after he was accused of bilking investors after billions, why are his victims still suffering? are subprime mortgages
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making a comeback? not quite yet but wells fargo is moving that way. the bank is looking for ways to stop its revenue decline as overall mortgage volume has fallen since the subprime bust, banks have lent only to the safest borrowers. if wells fargo loosens even a few of its tight loan requirements, other banks may follow. which could boost demand for homes. toyota is recalling more than 261,000 late-model lexus and toyota vehicles here because of various safety systems that could stop working. these include stability control and anti-lock brake systems in the cars and trucks are all 2012 and '13 models. the united auto workers is trying to build support among workers at the 17-year-old mercedes plant in vance, alabama. union organizers following the same route they used to reach this week's vote among workers at the chattanooga volkswagen plant. that voting ends tonight. the uaw has been working with german unions and the labor management group at mercedes'
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parent daimler. investors are taking interest in general motors. that is where we begin "market focus." according to regulatory filings as of the end of december jana partners added to its position upping it to nearly 8 million shares. leon cooperman of omega advisers opened a stake in the largest u.s. automaker buying more than 1 million shares. that sent the stock up 2% today. to $35.95. vf corporation saw fourth quarter earnings climb 10% on sales growth in its outdoor brands like the north face. but results fell short of estimates because of declines in some of the company's units like its jeans business. and that contributed to an outlook wranglers. shares tumbled 5% to 56.85. j.m. smucker missed earnings estimates. the coffeemaker took a hit because of competition in its peanut butter issues. health-conscious consumers didn't help business since many
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are aviding artificial sweeteners. a weak outlook topped off the bad report from smuckers. shares fell to 90.51, almost a 5% decline. however, this miserable winter hasn't been so bad for campbell's soup. more americans bought soup which sent profits up more than 70%. and the late thanksgiving holiday also helped by pushing shipments to retailers into the company's last quarter. the foodmaker reaffirmed its outlook as well so shares rose 5% to 43.01. after a series of back and forth buyout offers with men's wear house, joseph a. bank said it would buy eddie bauer in an effort to stay independent. bank is buying the privately held company for about $800 million because it said the deal provided better shareholder value than buying or selling to men's wear house. the chain upped its share buy-back plan. the stock rose sleetly to 55.12. there are reports that the u.s. speed skating federation is requesting to switch the team's
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suits which are designed by under armour. the team is trying to make sense of its poor performance and now the speculation has turned to the competitors' new high-tech suits. the uniform was designed by the sports retailer with help from defense contractor lockheed martin. shares fell more than 2% for under armour. big companies aren't the only ones the that pay attractive dividends that grow over time. small and medium-sized companies do too. jill coniff, president of edge asset management, good to have you with us. >> thanks, glad to be here. >> why are dividends so important to you? >> dividends are a sign of a company's strengths. and a company that pays a solid dividend, as well as grows that dividend over time, shows a commitment to shareholders. we believe that's a big driver to total return. >> it's also the search for yield, is it not, in a relatively low interest rate environment? so far in 2014 and all of 2013? >> absolutely.
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if you think about what's happening across the world and aging demographics, yield is very important. and we're also in a very low-yielding environment with interest rates. so given that stocks have run and investors are looking for places to go, dividend-paying strategies ar great alternative for investors for income as well as the potential for total capital appreciation over time. >> let's get to some of your stock picks. one that doesn't have all that high a dividend but is going to capitalize, at least from your point of view, on the growth in domestic energy production. tell me about marathon petroleum and why. >> marathon is definitely benefiting from that team of the u.s. energy independence. the u.s. is generating about 83% of its domestic oil needs right now. and that's going to continue. so what's happening is that production and that infrastructure around that needs to be built out.
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and marathon, as one of the largest independent refiners, has done a very good job of capitalizing on that opportunity. they made a smart acquisition last year. they have a strong balance sheet. the yield is about 2% right now. as you said that's not all that high, but what's important is that they grew it by 20% last year. so not only the yield and the good, strong fundamentals of the company, but that growth of the dividend is important to edge. >> and jill, another thing, you don't always go to the larger cap companies, you look for small and medium-sized companies that as you say may not have a large dividend but grow that dividend by a large percentage basis. and i would assume that your next pick calumet specialty partners fits under that umbrella? >> that's absolutely right, sue. at edge we look for companies that may not be tracked by wall street, overlooked by the average investor. so calumet specially products is about a $2 billion market cap
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company. you may not have heard of them but they're very good at what they do. they make over 35 hydrocarbon products that go into things that you do know. like baby oil and cosmetics and wd-40. so their specialty and focus really distinguishes them. and they do pay a very healthy dividend of just under 10% right now. so good, strong company and good, strong dividend. >> all right, we've got two sort of oil or petroleum-based companies. the third one is anything but. alexandria real estate equities. why that one? >> it's important to have diversification. and at edge we focus on dividend-paying strategies. and alexandria is a specialty read. we like specialty reads versus large-cap reads. we believe large cap has been a bit overpriced. so this is a different way to play that space. and what alexandria does is lease lab space to people like
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big pharmaceutical companies or biotech or universities. and the biotech segment of the market has been on fire. so this is a slightly different way to play that space. and they've consistently grown their dividend over time. >> and a yield of about 4.1%. jill, thank you very much. do you have any disclosures to make with respect to these stocks? >> i don't hold any of these personally. but we do hold them in our dividend-paying strategies at edge asset management. >> all right, jill. have a great weekend. >> thank you, you too. >> jill coniff, president of edge asset management. five years ago monday, a massive ponzi scheme shocked the world. we're not talking about bernie madoff. allen stanford, a globe-trotting multi-billionaire from texas, was accused of bilking investors out of $7 billion. his scam gets overshadowed by mr. madoff's but five years later, stanford's victims have fared considerably worse.
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>> hello, i'm allen stanford. >> reporter: allen stanford exude the american dream. sell-mail billionaire from rural texas who became a royal knight in the caribbean nation of antigua and an international booster of cricket. >> the mastermind and thunder of the whole project, sir allen stanford. >> reporter: investors, many retired oil workers respect ate it up. 28,000 people, 10 times the number of investors in madoff, bought certificates of deposit from stanford's antiguan bank, assured by his u.s. sales force that the cds were every bit as safe as hose in the u.s. angela and her family lost monthlies. like other victims she feels abandoned by the government. >> i do have to say that stanford victim dozen feel like the stepchildren in the ponzi world. >> reporter: in sharp contrast to madoff, stanford's investors have recovered next to nothing. many still believe stanford got a pass for years, thanks to connections, never proven, that he alluded to in a 2009
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interview. >> were you helpful to the authorities in the u.s.? >> you're talking about the cia? >> you tell me. >> i'm not going to talk about that. >> reporter: even the federal judge overseeing the stanford case wondered aloud in court last month why the justice department went after bernie madoff's main bank but not, so far, after the five banks implicated in the stanford case. no comment from the department. for his part, allen stanford still insists he's innocent. from a federal prison in florida he's appealing his conviction and 110-year sentence. but with all his assets frozen and having fired the last of more than a dozen attorneys he's representing himself. filing legal briefs from prison in longhand. "i or any american citizen deserves better than this. the presumed innocent part of our constitution is only a myth in america today." his victims are unimpressed. >> of course we're happy allen stanford is behind bars. but there's so many other injustices in this case.
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>> reporter: ralph januaryvy, the attorney appointed by the court to recover funds for the victims, says in a letter marking the anniversary, he will continue working tirelessly but the process is difficult, lengthy and expensive and a race against time. since the scandal broke in 2009, 176 of allen stanford's investors have died. scott cohn, "nightly business report." more people across the globe are eating chocolate and not just on valentine's day. will that translate into higher priceth when you feed your sweet tooth?
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doing business may get easier for the legal pot shops in colorado. a justice department official says the administration is preparing written guidelines for banks that would let them set up accounts for the licensed marijuana stores if the banks cooperate with regulators on issues like money laundering. the pot shops now typically deal in cash only. mm, a cup of hot chocolate topped with whipped cream and a box of chocolates. okay, but hey, it's valentine's day. hang on to your wallet, however. such warm indulgences may soon come at a hotter price. morgan brennan has more. >> reporter: nothing says valentine's day like a box of chocolates. the national confectioners association says chocolate sales this valentine's day will hit nearly $800 million, just in the u.s. so it's no wonder chocolatiers prepare months in advance. >> it's the biggest day of the year so we are getting ready. >> reporter: people are
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consuming more chocolate during the rest of the year as well. so much so that some analysts expect cocoa supplies to fall short of global demand by more than 100,000 tons this year. euro monitor says chocolate sales are set to grow faster than any other confectionary treat over the next five years. >> globally it's a lot to do with emerging markets. india is one of the faster-growing markets in the world right now. it's a lot to do with the fact that their incomes are getting to a level where they can start affording chocolate in their diet. so that's really pushing up the overall demand for cocoa and chocolate. >> reporter: changing tastes are leading to tighter cocoa constraints. here in the u.s., more consumers want dark chocolate as studies tout health benefits. all of this means more demand for cocoa beans, which comes largely from west africa, a region impacted by harsh weather and political instability. it's all pushed prices higher. cocoa futures have climbed 9% since the start of 2014, trading near a two and a half year high.
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higher prices mean higher costs for gourmet candymakers. >> a batch like that is about $250. sa pallet of chocolate costs a lot of money. a pallet will be more than $15,000. >> reporter: this is the vault, 4 1/2 tons of chocolate stored here, it's the heart of the operation. each one of these pallets weighs a ton and can cost $15,000. the higher of the cocoa level, the higher the price. still, consumers won't feel the cocoa pinch just yet. big companies like hershey's hedge their supplies, locking in prices up to two years in advance. gourmet chock lar tiers? valentine's day preparations started months ago, meaning impacts won't be seen until at least easter. even then it will be the difference of pennies. with champagne-filled bon bones
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and dark-covered orange peels from provence, consumers might not mind. >> yum. that's it for "nightly business tonight? thanks for watching, happy valentine's day, see you monday on presidents' day with a holiday edition of "nightly business report" to help you pay less tax. >> "nightly business report" has been brought to you in part by -- >> rounded by jim cramer an independent source for stock market analysis. cramer's action alerts, home to his multi-million dollar portfolio.
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♪ it's all right, it's okay ♪ ♪ doesn't really matter if you're old and gray ♪ ♪ it's all right, i say, it's okay ♪ ♪ listen to what i say ♪ it's all right, doing fine ♪ ♪ doesn't really matter if the sun don't shine ♪ ♪ it's all right, i say, it's okay ♪ ♪ we're getting to the end of the day ♪


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